Chevron Beats Q3 Earnings by a Whisker - Analyst Blog

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U.S. energy giant Chevron Corp. ( CVX ) just about managed to beat third quarter earnings estimates on higher crude prices and a rise in output. Earnings per share (excluding adjustments for foreign-currency effects) came in at $2.71, a penny above the Zacks Consensus Estimate of $2.70.

However, Chevron's performance deteriorated from the year-ago adjusted profit of $2.83 per share amid weak refining margins.

The integrated supermajor's quarterly revenue moved up slightly (by 0.8%) year over year to $58,503.0 million. However, it was not enough to beat the Zacks Consensus Estimate of $59,346.0 million.

Exxon Mobil Corp. ( XOM ) - the world's largest publicly traded oil company - reported higher-than-expected earnings yesterday, while European biggies Royal Dutch Shell plc ( RDS.A ) and BP plc ( BP ) came out with contrasting results. Shell missed estimates but BP beat earnings forecasts, apart from announcing a share repurchase program and a payout hike.

Segment Performance

Upstream: Chevron's total production of crude oil and natural gas increased by 2.7% from the year-earlier level to 2,585 thousand oil-equivalent barrels per day (MBOE/d). Volume gains in U.S., project ramp-ups in Nigeria and Angola, together with a fall in maintenance-associated downtime at Kazakhstan's Tengizchevroil joint venture were somewhat offset by normal field declines.

The U.S. output improved 2.8% year over year, while Chevron's international operations (accounting for 75% of the total) delivered a 2.7% jump in volumes.

Notwithstanding gains on the production front and higher crude oil prices, upstream earnings declined marginally (by 0.9%) from the year-ago period - to $5,092.0 million - on the back of spiraling operating expenses.

Chevron's production outlook remains one of the most robust in its peer group, with a number of major initiatives scheduled to come online during the next few years. Major start-ups during the last few months include the liquefied natural gas (LNG) project in Angola, deepwater Usan project in Nigeria and the Caesar/Tonga project in the deepwater Gulf of Mexico.

Amongst the major upcoming projects, Chevron's Gorgon and Wheatstone natural gas initiatives in Australia are progressing well, while the Jack/St. Malo and Big Foot initiatives in the deepwater Gulf of Mexico remain on track for late 2014 start-up.

Downstream: Chevron's downstream segment achieved earnings of $380.0 million, 44.8% lower than the profit of $689.0 million last year. The results were negatively influenced by lower refined product sales margins and higher repair/maintenance expenses in its domestic business. These factors were partially offset by better performance from the 50%-owned Chevron Phillips Chemical Company LLC.

Capital Expenditure, Balance Sheet & Share Repurchases

The second-largest U.S. oil company by market value after Exxon Mobil spent $10,585.0 million in capital expenditures during the quarter. Approximately 91% of the total outlays pertained to upstream projects.

As of Sep 30, 2013, the San Ramon, Calif.-based company had $17,014.0 million in cash and total debt of $18,581.0 million, with a debt-to-total capitalization ratio of about 11.4%. As part of the stock repurchase program announced in 2010, Chevron repurchased $1,250.0 million worth of shares in the third quarter.

Zacks Rank

Chevron currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.

BP PLC (BP): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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